Mayor's wife pushes to get a slice for indoor tennis facility from fund tagged for marketing

Sep. 15, 2013

Cindy Huether

Written by

David Pfeifle

Jim Entenman

Steve Metli

Tom Bosch

The Community Indoor Tennis Center group is beginning its third phase of fundraising and hoping to gather another $1.5 million to build a seven-court facility in Sioux Falls.

The group also has begun looking for funding from the $2-per-night room fee that city hotels charge. That fee generates $1.6 million a year.

Working on their behalf is Mayor Mike Huether’s wife, Cindy, the executive director of the Sioux Falls Tennis Association and a board member of Community Indoor Tennis Center.

In emails obtained by the Argus Leader, Cindy Huether asked City Attorney Dave Pfeifle whether it would be legal to use money from the room tax for capital projects, which would include a tennis facility. Her question prompted Pfeifle to turn the matter over to an outside lawyer, Gregg Greenfield.

Cindy Huether, who would take questions for this story only by email, said her group simply was asking the same question about the hotel tax that other groups are asking: Is it legal to use for capital projects?

“They just want some clarification on what those funds can be used for exactly,” Pfeifle said. “Cindy Huether is one of several who have asked that question.”

The issue illustrates two points: First, even though the Sioux Falls economy is strong, organizations trying to raise money for projects, which also includes a group raising money for an indoor ice facility, are competing for limited resources. Thus, a funding source such as the hotel fee is a tempting money pot.

Involvement by wife of mayor is delicate

The emails between Cindy Huether and her fellow board members also show that she is active in civic organizing, and while her interactions did not violate any ordinance or city ethics provisions, her role can intersect with city employees who serve at the pleasure of her husband.

In an email, Mayor Huether said he is not an expert on how the hotel money can be spent, and he suggested that his wife talk to Pfeifle about the issue. He also said that other groups are asking the same question, which he said was “very logical and legitimate to me.”

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“Like I do with any other citizen, I work to get them help from the most capable and qualified resources on the city of Sioux Falls team,” Huether said. “Dave, our city attorney, was the person for Cindy’s question.”

The question remains unanswered.

In 2010, hotel owners petitioned the City Council to create a business improvement district. Each hotel would charge guests an additional $2 per night in addition to other taxes. The revenue generated from the fee eventually is turned over to the Sioux Falls Convention and Visitors Bureau. A board, known as the Convention and Visitors Bureau BID Board, oversees how the money is spent. That total now comes to about $1.6 million a year.

But those who helped create the district, including City Councilor Jim Entenman and Tom Bosch, former general manager of the Holiday Inn City Centre, say the money generated by the district was supposed to be used by the Convention and Visitors Bureau to market Sioux Falls to bring more visitors to the city. It was not to be used to pay for new buildings — or brick and mortar projects.

“When I went out and talked to hotels, that’s exactly what I told them,” Bosch said.

The district also proved to be good for the city’s budget, Entenman added, because it enabled the city to withdraw $550,000 in annual funding to the Convention and Visitors Bureau. At the same time, the money collected by the district was a more reliable funding source for the bureau.

“We were able to get a more dependable source of income that wasn’t susceptible to the whims of politicians,” he said.

Entenman said that to get the buy-in from some hotel ownership groups, the money had to be explicitly designated for marketing. Thus, the ordinance that created the district says it’s “for the purpose of funding the marketing and promotion of the visitor industry in the city of Sioux Falls.”

“In our case, we were very specific in how we use it,” Entenman said.

But, Entenman said, the ordinance could be changed to allow more uses for the funds.

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“That doesn’t mean future BID boards might change the rules,” he said. “That will be up to them to determine in the future.”

Spending on capital projects 'depends'

If the rules were changed — presently there is no proposal to do that — then the uses of the money would have to conform to state law. That law establishes how business improvement districts can spend money.

Money generated by business improvement districts can be spent in different areas, Pfeifle said, but he isn’t sure whether state law allows it to be spent on specific capital projects.

“The lawyerly answer is, it depends,” he said.

It was this question that Cindy Huether posed to Pfeifle in an email dated Aug. 20.

Both Huethers have been longtime tennis boosters, and it was natural that Cindy Huether would take a role in the effort to secure funding for an indoor facility. And while the spouses of previous mayors have remained in the background, it’s not uncommon for the spouses of chief executives to be active in civic affairs and public policy. Michelle Obama, for example, is leading an effort to encourage better eating habits. Linda Daugaard chaired a task force on infant mortality and she has promoted reading to grade schools, said Tony Venhuizen, Gov. Dennis Daugaard’s director of policy and communications.

“And she is currently leading the effort to encourage more people to be foster parents — she has given quite a few speeches around the state on that,” Venhuizen said.

In the Aug. 20 email, Cindy Huether said she was talking to a Convention and Visitors Bureau BID Board member about the restrictions on spending revenues from business improvement districts, and she asked Pfeifle whether the revenues could go for capital improvement projects.

“Mike said you would be the best person to ask about this,” the email said.

Pfeifle responded a few minutes later, asking whether she was talking about a “particular expense.”

“Yes,” she responded, “could the BID revenues be used for CIP projects that would benefit the community and bring tourism dollars into the city?”

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In an email Aug. 22, Pfeifle notified Huether that her request had been turned over to Gregg Greenfield, who “has helped the city on BID issues for the last couple years.”

A few hours later, Cindy Huether sent an email to 10 members of the Community Indoor Tennis Center group. She told them that Pfeifle thought it was OK to use BID monies for capital projects but had turned the issue over to Greenfield to “double check.”

“I’m not sure what we want to do if it turns out that it is OK to use money for CIP projects,” she said. “I know three BID Board members that would be totally in favor of using money for these types of projects.”

Steve Metli, the city’s former planning director and a member of the tennis group, replied: “Great find Cindy ... good use of money to boost visitorship.”

Cindy Huether replied: “I agree.”

Metli last week said the tennis group was looking for a donation from the Convention and Visitors Bureau. “Whether it comes from the BID or another source of their funding makes no difference to us,” he said.

Cindy Huether, in her emailed response to questions from the Argus Leader, also said the group was looking for a donation.

“The leadership team thought it was very appropriate as hotels, bars and restaurants will greatly benefit economically from indoor facilities for ice and tennis,” she said.

The facility, she added, will allow Sioux Falls to “host high school, college, local, regional and national tournaments that we can’t compete for today.” And she said the average tennis tournament would bring $300,000 to the city.

Cindy Huether would not name the three BID Board members she referenced as being in favor of using BID money for brick-and-mortar projects. Jan Gruenwaldt, a BID Board member and general manager of the Best Western Ramkota hotel, said it’s possible some new board members don’t understand the intent behind its creation.

“It was sold with the concept of marketing,” she said. “No bricks and mortar, no salaries.”

But that doesn’t mean the BID can’t help in promoting tennis, hockey or other sporting ventures, Gruenwaldt added. Once the organizations have built their facilities and are ready to start competing for tournaments, the BID revenues can be used to cover those costs.

“It’s pure selling, is what it is,” she said. “Once the tennis is here, or hockey, we can help.”